Will Digital Channels Lead to a Branch Banking Renaissance?
What happens when consumers start using mobile deposit? According to data from Raddon Financial Research (now part of Fiserv), they start frequenting the branch lobby a lot less. The Raddon data provides more definitive insights into a trend we've all been watching for some time.
Bob O'Meara, vice president of research at Raddon, points out that mobile deposit capabilities impact branch traffic more dramatically than online banking, tablets or mobile alone: "Things change with the addition of mobile deposit. Just 50 percent of mobile deposit users say they transact with tellers in the lobby or drive-up each month, and their transaction count is just below two per month."
While self-service in digital channels will continue to reduce physical traffic, and banks will continue to review and reduce their real estate costs, the bank branch will not die. In fact, I believe the digital trends will lead to a renaissance in branch strategy and design.
Banks can refocus and even expand into new markets with a smarter footprint. For instance, a bank's new strategy could include a central hub branch, surrounded by a number of smaller "virtual" branches. Financial institutions can transform their existing retail locations into a combination of community-focused banking hubs and "virtual branches" through a wide array of technology tools. These include video transaction kiosks, functionally rich ATMs, use of tablets by associates and other interactive strategies to manage costs, all of which build a sense of community and maximize customer engagement.
Financial institutions are already experimenting and innovating. PNC recently unveiled a portable pop-up branch in Atlanta, staffed with iPads and a smart ATM, while Umpqua Bank unveiled its own futuristic branch (or store, as Umpqua calls its branches) in San Francisco, featuring large digital displays and high-tech conference rooms for small businesses. While these are different approaches, both incorporate technology and self-service tools that will help change how banking is experienced.
There is no doubt the branch will change but it's about more than just cost efficiency. The branch of future should evolve to a community marketplace that goes beyond transactions. This will make it a more integral part of the overall channel ecosystem, which will be geared to delivering a personalized experience and excellent service to the customer.